CPE - Welfare State

Welfare State as Redistributive.

**side note, if defined as this all redistribution stuff is relevant** All taxation and spending is redistributive. Social programmes can be more or less progressive in how benefits are provided and financed. Cash welfare is highly redistributive. Empirics. Post-tax and transfer mini is more variable across countries than market mini.

What is a social risk?

A risk derived from society, in the sense that individuals are subject to these risks because of societal dynamics, changes, and pressures (Alcock, May, and Wright, 2012, 107). But what about old age.. not a society risk. A risk that only society is capable of tackling? However, it is not necessary that the welfare state be involved in dealing with all such social risks, private health insurance, for example, seems to work effectively enough as a market-based solution. Most convincingly, 'social risks' could be thought of as risks which individuals face but that society has an interest in, or even risks to society itself.

Liberal Welfare States - Residual

Access to benefits and services, means tested. Most welfare state provision is from the market Welfare state is very minimal. US and Canada

Contradicting Welfare State Empirics.

Ambiguities make it difficult to operationalize the 'pubic sector' in empirical studies, an issue which Uusitalo (1984) claims results in inconsistent empirical findings about its growth.

Institutional Approach (Democracy)

Argument typically phrased without reference to any particular social agent or class and it is in this sense that it is institutional. 1) Majorities favour redistribution. 2) Democracy nurtures intense party competition around the median voter which will fuel rising public expenditure. Lindert 2004. Little social spending pre 20th century mainly because political voice restricted to property owning men. Vote extension → Llowd George's assault on the rich... Empirical success. Schneider 1982. The number of votes cast in national elections on a per capita measure is strongly associated with earlier adoptions of social welfare programs in 18 Western nations between 1919 and 1925.

PRT (empirics)

Bjorn (1979), Cameron (1978) and Hewitt (1977) find that post-war expansions of government social expenditures are caused in part by the determinants of the social democratic theory. Stephens found that, in 17 capitalist democracies, public spending in 1976 is significantly related to the number of years that social democratic parties have been in the executive and the extent of economy-wide bargaining by unions. It is the conclusion of Skocpol and Amenta (1986), and myself, that the effect of worker power and social democratic parities "applies best to the relative expansion after World War II of national social expenditures."

Increasing openness to trade.

Cameron 1978. Open economy concentrates industry on compariative advtange. This leads to bigger unions and more left wing parties. Roddrick. Argues that, by increasing the size of the public sector, the government can dampen the effect of the open economy on employment, consumption and production. "Globalization, by increasing the mobility of capital and labour across national borders, extricates the labour supply from the national control and enables the financial sector to refuse doing services as a national utility." Empirics. Open economies were far more likely to experience increases in public spending in the post-war period. WHO? finds that the openness of the economies studied in the early 1960s is a powerful predictor of the expansion of government consumption over the subsequent three decades. Effect is stronger for lower-income countries, whereas exposure to external risk (an operationalization of 'openness') results in higher social security and welfare spending in higher-income countries but not overall government consumption.

Logic of Industrialism.

Capitalism creates economic surpluses and social atomisation. It also destroys tradition social institutions. (Wilensky, Flora and Abler 1981)

Wagners Law and Income growth

Certain level of economic development is needed as a prerequisite. Wagner 1883. The demands of citizens for services and their willingness to pay taxes is income-elastic, thus as economic affluence increases, so do these demands and this willingness. One would expect the public sector to expand in accordance with greater increments of economic affluence. Empirics. This argument fared well in national studies based on data for the 1940s, 1950s and 1960s, and especially so when the sample included large numbers of countries of varying levels of economic development (Skocpol and Amenta 1986). Bird (1971), Musgrave (1969) and Gupta (1968) all failed to find any positive cross-national relationship between economic growth and government share in economic product if the cross-section is confined to developed countries. These considerations point to a synthesized conclusion; economic growth is an important determinant of public sector growth, but only for those less advanced nations. (Cameron 1978)

Mares 2003

Companies and industries that are highly exposed to risk will favor a social insurance system where cost and risk are shared, leading employers to push universalistic unemployment and accident insurance.

Lowri 1964 taxonomy

Distinguishes between distributive, regulatory, and redistributive politics. Distributive. Narrowly defined groups or constituencies, such as congressional districts, seek to maximize their share of appropriations. Cost can be externalised leading to excess and waste spending. Regulatory. Pits losers against winners as some are advantaged and others disadvantaged by public policies (public procurement decisions, licensing, and other regulatory decisions). Redistributive. Politics of the Meltzer‐Richard variety is also contentious, but the divisions are now across class instead of sector.

Invisible tax thesis

Downs 1960. The size of the public sector depends on the amount of revenue it can raise, and this in turn depends on the government's ability to hide the revenue raising mechanisms from the public. Empirics. Cameron (1978) finds no evidence in support of this 'fiscal illusion' or 'invisible taxes' thesis, at least in the post-war period.

Welfare state as a power resource

Esping Andersen 1985. The social rights, income security, equalization, and eraditcation of poverty that a universalistic welfare state pursues are necessary preconditions for the strength and unity that collective power mobilization demands

Class Coalitions

From Esping Andersen. The breakthrough of Swedish social democratic hegemony stems from its capacity to forge the famous 'red-green' alliance with the farmers; the comparative disadvantage of the Austrian socialists rests in the 'ghetto' status assigned to them by virture of the rural classes being captured by a conservative coalition.

Recent public sector growth (empirics)

Growing in advanced and developing economies until 1970s since 19th century. By April 2014, general government total expenditure and general government revenue in the Euro Area accounted for 49.4% and 46.7% of GDP respectively (OECD 2014). Late 1970s to the mid 1990s saw a retrenchment of the public sector in many Anglo-Saxon economies. Moreover, while, in 1975, the public economy accounted for 53.5% of GDP in the Netherlands, the analogous figure in Japan was only 23.5% (Skocpol and Amenta 1986).

What does Welfare State do (outcomes)?

Guarantee minimum income. Reduce insecurity. Provide access to social services.

How to measure Welfare State?

In terms of resources. Revenue, expenditure, workforce. In terms of outcomes. Healthy, education etc In terms of coverage. how universal it is.

What does welfare state do (goals)?

Insure against risk Redistribute resources.

Decommodification

It is the granting of social rights. If social rights are given the legal and ractical status of property rights, if they are inviolable, and if they are granted on the basis of citizenship rather than performance, they will entail a decommodification of the status of indiiduals vis-à-vis the market. De-commodification occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market. Minimum definition od decommodification: Citizens can freely, and without potential loss of job, income or general welfare, opt out of work when they themselves consider it necessary.

Welfare State as an Insurer.

Many programs are horizontally redistributive; insure risk rather than change income distribution (some more at risk than others). Health, pension unemployment, disability - transfers across life-cycle/risk groups not only from rich poor. However, most spending does help the poor, even if it doesn't dramatically reduce inequality.

Logic of Industrialism (Marxism)

Marxists see the state as riot insurance - the 'peace formula' in democratic capitalism (Offe, Gough, O'Conner). Problem. Find welfare states in Eastern Europe but not capitalist...!

Other types of welfare states

Mediterranean Welfare States. Clientelism. Focus on pension provision but not much for unemployment. Antipodean Welfare states. Means testing bust threshold is set low and you can still get to a high level of benefits, not all that liberal

Gosta Esping-Andersen.

Non-linear view of welfare states. Power of left parties and unions in coalition with other actors explain more redistributive outcomes. Scandinavia = move from the left. Social Democrats introduce reformers and they represent a mix of workers and farmers. Created comprehensive and encompassing social programs. Gives workers more power. Bismark and Germany = a move from the Right. Fear of the working class. 1881-1889 - series of reforms introducing pension, incapacity and unemployment benefit. Look to preserve status by dividing middle and working classes. Liberal Model. Residual, limited state that builds on poor relief model. Weaker unions and left parties and weaker Christian Democrats. Problem - Iversen - "Much of the coalitional literature falls into the trap of post hoc description. Description, no matter how accurate, will not produce explanation." Neither the origins of the three worlds, nor their stability, can be said to be explained since there is no argument to preclude alternative outcomes.

What sample size to use when assessing public sector/ welfare state.

OECD vs Global Sample. Less data for developing countries (also less reliable) But OECD = small sample, and potential multicollinearity as the explanatory variables are related to one another

Problems with PRT

PROBLEMS. Explain why the Right also agree with it... How to specify the conditions for power mobilisation. Power of one agent cannot be indicated by its own resources: depends on resources of contending forces, on the historical durability of its mobilization, and on patterns of power alliances. Locus of power may shift away from parliaments (to neo-corporatist institutions). Class-mobilization thesis has rightly, been criticised for its Swedocentrism. Assumes linear view of power.o It is problematic to hold that a numerical increase in votes, unionization, or seasts will translate into more welfare-statism. Are choices of agents just an attempt to maximise utility given the institutional constraints In Austria and Germany at the very least, it was neither unions, nor social democratic parities that initiated large increases in social spending at the turn of the 20th century, rather conservative monarchs. (alter 1981) Two nations such as Austria and Sweden may score similarly on working-class mobilization variables, and yet produce highly unequal policy results.

What does it include?

Pensions, health, unemployment, sickness and disability, ALMPs, family benefits, housing income support. (Education?)

Power Resources and Civil Disobedience.

Piven and Cloward. Increased welfare benefits and other social legislation associated with an expanding public sector were granted following concessions by elites to protests by workers and the poor in the United States. But... Myles (1984) finds that civil disruption from 1960 to 1970 had little effect on pension expenditure in subsequent years and there is scant evidence to suggest that protest has a significant effect on public sector growth outside of the US.

Institutional Approach (Democracy) Problems

Problems. First major welfare-state initiatives occurred prior to democracy and were powerfully motivated by the desire to arrest its realisation. Napoleon III, Germany under Bismarck, Austria under Von Taffe. Conversely, welfare-state development was most retarded where democracy arrived early, such as in the US, Australia and Switzerland. How to explain growth of public sector after WWII? Eg; the franchise in the UK was extended to its present scope in 1928, and thus increasing democratisation cannot explain the boom in public sector growth between 1945 and the 1970s.

Korpi and PRT

Protagonists initiate policies (unions and workers). Consenters accept policies. Antagonists remain steadfastly opposed to policies. A reaction to cross class alliance literature. EMPLOYERS ARE NOT PROTAGONISTS. Counter. Inverness and Soskice. If firms are antagonists, then why do they continue to invest in countries with large and generous welfare states. There should be capital flight

Businesses and Welfare State (Mares 1998)

Social policies indirectly support the investments in skills made by employers by aiding them during times of sickness, unemployment or disability and by allowing them to reject jobs that do not correspond to their skill qualification. Large firms player a crucial role in the development of German welfare states. By 1881, German employers had submitted a proposal (the Baare bill of disability insurance) to the Recichstag suggesting that disability benefits should be paid to those involved in workplace accidents, and should be financed half by the contributions of employers, a quarter by the employees and a quarter by the local community.

Functional explanations of welfare state.

Social programmes as response to urbanisation, industrialisation and democratisation. Social programmes fill a 'need' created by developing democratic capitalism. Industrialisation causes new needs and pressures that follow from urbanization and unemployment (Wilensky and Lebaux 1965)

Continental/corporatist/Conservative welfare state

Stays out of family life. Happy to involve itself in place of market. Contribution based system. Benefits based on occupation. Less about redistribution. More about balancing life-cycle consumption. Germany, Austria, Netherlands

Businesses and the Welfare State.

Swenson asks, why did capitalists accommodate the welfare state? Point to features that served the interests of capital via reducing risk. Not politics against markets but politics supporting markets. Social programmes can be hedges against individual and firm risk which facilitate market exchange. Facilitate coordination between sheltered and exposed sectors - Swenson. If welfare state is built on shoulders of employers, we should expect investment and economic performance to suffer! But there is no observed relationship between government spending, investment and national income across advanced democracies (Lindert 1996) Counters! Businesses often lobbied against social programs. Do 'risk groups' act as political actors?

What is the Welfare State?

System of social protection 'in which organized power is deliberately used (though politics and administration) in an effort to modify the play of market forces in three directions'. Welfare state = social expenditure? All spending cannot count equally! Austria spend a large share of benefits on privilliged civil servants. Tax privileges and pension insurance plans to middle classes? Thatcher Grew Total Social Expenditure. Must we categorise welfare state by type?

Korpi and Palme 1998

Taking from everyone and giving back to everyone is more redistributive than taking from just rich and giving to just poor.

Social Democratic Welfare States.

Universalistic benefits in healthcare, childcare and education. High levels of taxation levied on most earners. Costs of social risks relatively evenly distributed across society but there is also even protection of every with generous benefits available to even relatively high-earners. Given at a high standard to help entice middle classes

How do welfare states address social risks?

Welfare states address social risks by reallocating the costs of potential negative outcomes which affects the decisions that individuals make.

Problems with functional/logic of industrialism theses.

Why does social policy only emerge 50 and sometimes 100 years after traditional community is effectively destroyed? Collier and Messick 1975. The percentage of the workforce in agriculture in the UK was just 9% at the time of the primary adoption of social security measures, whereas it was 91% for Saudi Arabia. The percentage of the workforce in industry at the time of adoption ranges from 3% in El Savlvador to 54% for Switzerland. Expansion stops in 70s and 80s (slower growth in spending). Countries remain at very different levels and compositions of spending. Also (Iversen) tension exists between social programs as 'redistributive' and as a source of 'comparative advantage'.

Power Resource Theories of Welfare State.

Worker Power (theory developed in 1970s - Korpi and Stephens). Welfare state not a function of economic pressures. Larger welfare states emerged where there were stronger left parties and unions. Social classes are the main agents of change; balance of class power determines distributional outcomes. Distributive conflict is key. Social policy can be compatible with efficiency but is not the key to it. If center‐left governments simultaneously promote pre‐fisc income equality and redistribution, partisanship may not only explain distributive outcomes but solve the Robin Hood paradox.